The second Belt and Road Forum (BRF) that began Thursday in Beijing will serve as a stocktaking exercise for China’s ambitious Belt and Road Initiative, which has come to dominate the country’s foreign policy over the last five years. This “21st Century Silk Road”, which is often referred to as China’s Marshall Plan, has managed to get more countries to sign up since the first forum was held in May 2017.
The BRI, or yi dai yi lu, is made up of a “belt” of overland routes and a maritime “road” connecting Southeast Asia to Eastern Europe and Africa. President Xi Jinping’s ambitious “Project of the Century” will impact countries that account for half the world’s population.
Xi will deliver the keynote address Friday in the presence of 37 Heads of State or Government, including Russia’s President Vladimir Putin and Pakistan’s Prime Minister Imran Khan, and 5,000 representatives from 150 countries. While the United States is expected to send lower-level delegates, India is once again giving the forum a miss.
Xi will also chair a leaders’ roundtable Saturday. A high-level meeting and thematic forums will also be part of the three-day BRF.
BRF 2017 vs BRF 2019
When it was announced in 2013, the BRI was an initiative focused solely on building infrastructure projects; it now has a much broader framework, which includes financial and humanitarian aid projects. In the first BRF in 2017, China said, more than 60 countries and international organisations were involved. That figure, according to official statements, is now “126 countries and 29 international organisations”. New countries such as Italy and Luxembourg have brought into the project, concerns raised by other European Union countries notwithstanding.
The funding model has also undergone changes. While initially funds were sought from the China-headed Asian Infrastructure Investment Bank, and several other financial institutions within the country, Beijing is now pushing for “third-party market cooperation” under which investments are shared by more than one country.
China is also re-examining the ways in which the initiative is presented to overseas audiences. It often blames the international media for providing “flawed” or “ill informed” coverage of the BRI.
Progress of the project
Since being formally introduced into the Communist Party’s constitution in 2017, the BRI has evolved into a comprehensive strategy for China, with greater involvement in projects with a humanitarian aspect.
Last week, Chinese Foreign Minister and State Councillor Wang Yi said at a press conference that in the six years since the launch of BRI, “the trade volume between China and countries joining the BRI has surpassed 6 trillion US dollars, with more than 80 billion US dollars of Chinese investment in those countries”. He also said 82 overseas cooperative parks had been jointly built by China and the countries along the route, creating nearly 300,000 jobs for local people.
However, voices of criticism — from opposition parties and civil society groups — too, have become louder in some BRI countries over the last two years. Several governments have been rethinking and renegotiating the costs of BRI projects. Hambantota served as a cautionary tale, grabbing international headlines after Sri Lanka was forced to lease the port to China for 99 years. The complete suspension, and then a rethink, of a billion-dollar railway project in Malaysia, and rethinks on projects costs in the Maldives, Ethiopia, and even Pakistan, have been setbacks for the BRI.
The problems that have emerged as projects have progressed from the planning to the execution stage, has prompted a recent report by a Chinese think tank, advising Chinese enterprises to change their strategy.
In its April 2019 report, the Grandview Institution, which also serves as a government advisory research body, noted that Chinese enterprises have “operational problems” in overseas port projects linked to the BRI. There was, the report said, a “premature mentality” in the commercial evaluation of investment projects, “serious inadequacy in debt evaluation, a lack of information transparency and a lack of evaluation on the impact of regional social culture”.
Besides the concern over China’s so-called “debt-trap diplomacy”, several countries including the US, Japan, Germany, Russia, and Australia have expressed unhappiness about the impact of Beijing’s moves on their own economic and political interests. EU countries banded together last year to accuse the BRI of hampering free trade, and giving Chinese enterprises an unfair advantage.
Italy’s decision to join the BRI in March this year drew sharp criticism, especially from Germany. Italy and China signed an MoU totalling 29 deals worth 2.5 billion euros in which they intend to work together to develop Italy’s port infrastructure, transport and logistics. Although 13 EU member states are already part of the BRI, Italy is a major western power whose action has jolted Western leaders.
Amongst the first countries to oppose the project, India had signalled its strong displeasure ahead of the first BRF over the inclusion of the China-Pakistan Economic Corridor (CPEC) as a BRI project. The CPEC passes through Pakistan-Occupied Kashmir, and is the main reason for India not participating in the BRI.
“Regarding the so-called ‘China-Pakistan Economic Corridor’, which is being projected as the flagship project of the OBOR (One Belt, One Road), the international community is well aware of India’s position. No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,” the then Ministry of External Affairs official spokesperson Gopal Baglay had said in 2017.
“Connectivity projects must be pursued in a manner that respects sovereignty and territorial integrity,” Baglay said. India’s position has not changed since then.
While China has painted CPEC as a commercial project, it has also deployed security personnel over the years to protect the corridor. This makes it an active participant in domestic politics in the subcontinent.
Pakistan and BRI
While China and Pakistan remain “all-weather allies” who loudly proclaim their friendship, Prime Minister Khan has expressed concern over his country’s excessive reliance on foreign debt. Pakistani officials have voiced concerns over Chinese companies receiving tax breaks, and undue advantage in negotiating CPEC projects.
China’s focus is on the Gwadar port, which will bring the Arabian Sea close. “The China-Pakistan Economic Corridor, however, plans not to limit Gwadar to a connecting port only, but enrich it as an economic hub that will cater to the local population by improving their livelihoods. Projects planned for the Gwadar Port City aim at capacitating Balochistan to its full economic, social, technical, and energy potential, and closely integrating it within the economic framework of Pakistan and China,” says the CPEC website.